Drink tests shake up McD's offerings

(Crain's) -- It looks like consumers could be able to get their fix of Red Bull at the Golden Arches.

Fountain giant McDonald's is testing the sale of bottled and canned drinks in about 150 locations, though options vary by location and it might take years for the plan to finally be realized. So far, a variety of colas, teas, energy drinks and waters, including Red Bull and Coca-Cola's Vitaminwater, are being tested, along with some beverages from PepsiCo.

The idea is to offer more options to consumers who are going elsewhere for their beverage fixes. Larry Light, founder of Arcature and former global chief marketer of McDonald's, said the company realized several years ago that it wasn't meeting consumers' needs in that regard. "We were seeing [customers] buy food at McDonald's and then go buy their beverages at 7-Eleven, or they'd go through a drive-through with the beverage already in their car," he said.

"It's a great opportunity for (McDonald's) to get incremental sales," said Darren Tristano, exec VP at Technomic.

The expanded beverage selection could also provide a much-needed boost to margins. Longtime franchisee Irwin Kruger is part of a test of Vitaminwater, a Coca-Cola product, in 20 New York-area stores. He's been promoting the fortified water as an upgrade to extra-value meals in his Times Square location for four to six weeks and says he is happy with the results. "Any extra margin in this economy goes a long way."

The test includes products from PepsiCo, archrival to McDonald's fountain partner Coca-Cola. The PepsiCo products being tested are Mountain Dew, Diet Mountain Dew, Lipton Green Tea and Diet Lipton Green Tea, said David DeCecco, a Pepsi spokesman. "We're pleased to be working with McDonald's, and we're delighted consumers have responded so favorably to the test," he said.

A spokeswoman for Red Bull confirmed that its signature energy drink is part of the program, although she declined to comment on how consumers have responded.

Coca-Cola has been testing "virtually the entire Coke product line in bottle and can," said spokesman Ray Crockett. "The tests are designed to evaluate a number of different concepts, especially variety and convenience."

McDonald's declined to provide a full list of brands involved in the test and said a final lineup has not been determined. "We're working out the execution details of how to best bring this to market for our customers with the complexity of bringing all of these beverages to the restaurant," said Neil Golden, chief marketing officer of McDonald's USA.

Spokeswoman Danya Proud declined to lay out a time frame for the completion of the test or a larger-scale rollout of bottled beverages, saying only, "This year into next year and even into 2010, you'll start to see the full realization of the beverage plans."

So far, she said, it's going well. "We're encouraged by what we're hearing from our customers. They're telling us they appreciate the added value, convenience and selection."

This story originally appeared in Crain's sister publication Advertising Age.